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Kuwait assembly approves 2015-16 budget, $27 billion deficit
July 2, 2015, 1:11 pm
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The National Assembly on Wednesday approved the budget of ministries and other government departments for financial year 2015/2016. According to the approved budget, the revenue of State institutions is estimated at KD 12.2 billion and KD 1.2 billion will be added to the Future Generations Fund.

The projected expenditure is KD 19.17 billion while the increase in expenses and allotments against the revenue is estimated at KD 8.18 billion which will be covered from the State’s reserve fund. Talking about the accomplishments of the Budget and Final Accounts Committee, particularly its study on the budget of ministries and government departments for fiscal 2015/2016, Committee Chairman Adnan AbdulSamad disclosed they held 77 major meetings and 10 submeetings through which 39 reports and 100 topics were discussed and then presented to the Parliament.

He explained the committee used a new mechanism for deliberations on the budget and this resulted in the rejection of 15 proposed budgets, affirming the reductions in some chapters have no effect on the salaries and direct subsidies. He clarified that after an extensive study on the State budget; the committee is sure that the reductions will not affect the salaries, employment plan, quality of public services especially health and education, development projects, and subsidies given to citizens

Rationalization

He said the committee played a crucial role in the rationalization of the budget in view of the lower oil prices by rejecting many unjustified requests for increase, especially the government agencies which the State Audit Bureau found to have a number of anomalies. On the revenue, AbdulSamad revealed the total revenue of the State is projected at KD 12,052,075,000 — 40 percent decrease compared to the previous fiscal year, while the oil revenue constitute 88 percent of the total revenue.

The oil revenue is estimated at KD 10,598,900,000 — 44 percent lower than the previous fiscal year. This estimate is based on the $45 price of oil per barrel, exchange rate of 290 fils for a dollar and Kuwait’s quota in OPEC — 2,700,000 barrels per day. The projected budget deficit will most likely decrease considering the two percent increase in the selling price of Kuwaiti oil and the exchange rate of the dollar against the dinar.

However, the deficit will remain as long as the oil price is less than the equilibrium point in the budget — $77 dollars, after deducting the allotment for the Future Generations Fund. The oil production cost is projected at KD 2,483,001,000 and the cost of production per barrel is estimated at KD 2.515. The non-oil revenue is projected at KD 1,263,300,000 — 15 percent increase compared to the previous fiscal year. Despite this increase, the committee had reservations on some projections so the concerned authorities were asked to provide details.

Meanwhile, the expenditure is projected at about KD 19 billion with salaries taking 52 percent, 20 percent for subsidies, and 17 percent for construction projects and investments. The budget for salaries is estimated at KD 5,386,080,857; goods and services at KD 2,602,795,000; means of transport, machines and equipments at KD 285 million; construction projects, maintenance and public acquisitions at KD 2,076,000,000; and miscellaneous expenses and transferred payments at KD 8, 819,799,000.

The increase in expenditure and allotments against revenue is estimated at KD 8,181,437,000 and this will be covered from the State’s general reserve. The estimated expenditure includes KD 120 million for emergencies which will be used as per the regulations laid down by the Cabinet in line with the proposal of the finance minister. Speaking about the State budget, Minister of Finance Anas Al-Saleh regretfully announced that the deficit came earlier than expected. He said that for the first time since fiscal 1999/2000, there is a budget deficit as per the preliminary data on the final account for fiscal 2014/2015 — estimated at KD 2.314 billion.

This is contrary to expectations that the deficit will occur any time from 2017-2021. He admitted Kuwait is facing a difficult situation financially, “which requires us to seriously think about financial reform to control our spending this year. We have to diversify sources of State revenues, so the budget does not remain at the mercy of developments in the world oil market.” He said the revenue expected to be collected during financial year 2015/2016 is about KD 12.2 billion while the expenditure is estimated at KD 19.17 billion including 5.3 billion for salaries.

The budget for projects is estimated at KD2.076 billion and KD 1.800 billion will be for construction projects, including KD 968 million for the 2015/2016 annual development plan. The expected budget deficit for fiscal 2015/2016 is KD 8.18 billion based on $45 price of oil per barrel. If the average oil price remains at $60 per barrel for fiscal 2015/2016, the deficit is expected to decrease to KD 4.5 billion. On the other hand, Parliament Speaker Marzouq Al-Ghanim adjourned today’s session for five minutes to mark the closing of the current legislative round.

In his speech, Al-Ghanim pointed out this legislative round witnessed unprecedented achievements, and strong coordination between the Parliament and government in serving public interests. He asserted the family issue is covered by several draft laws, such as the Family Court, Domestic Workers and Family Care bills. On the security issue, Al-Ghanim revealed the Parliament passed a package of laws, including the installation of security cameras, weapons collection and DNA profiling. Secretary General of the Parliament Allam Al-Kandari then read the Amiri Decree to close the third session of the 14th legislative term. The Speaker adjourned the legislative session until October 27.

Source: Arab Times

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